FEBRUARY 2, 2002—Texas Mutual Insurance Company is pleased to announce the addition of Ken Lauber
as its Vice President of Field Operations. Lauber will oversee the company’s Dallas, Austin and
Houston underwriting operations. He will also direct the company’s statewide marketing efforts.

Lauber has extensive insurance experience, with a heavy emphasis in property/casualty.
In the past 19 years, he has managed marketing, underwriting, and service operations for the
CNA Insurance Company in California, Illinois and Louisiana. His most recent responsibilities
included overseeing all of CNA’s Houston and Austin branch territories as its president.

JANUARY 29, 2002—Travis County District Court sentenced Liza Fortune on insurance fraud-related
charges, and ordered her to pay $15,013.89 in restitution to Texas Mutual Insurance Company.
Fortune received a two-year sentence (suspended for four years), a $250 fine, and a court
order to seek counseling as recommended by probation.

Fortune violated a state law that says injured workers are entitled to temporary income
benefits (TIBs) only when they are unable to work because of an on-the-job injury. A Texas
MutualSM investigation showed that, not only was Fortune able to work while
she was collecting TIBs, she was working for two temporary service companies.

Fortune allegedly suffered an on-the-job injury while working for Arlington Jet Center
Inc. Her doctor declared her unable to work because of the injury, and Texas Mutual
Insurance Company began paying her TIBs.

Arlington Jet Center Inc. officials contacted Texas Mutual Insurance Company when they
grew suspicious of Fortune’s claim because she was difficult to contact during her time
off work. Sharmane Bryson, a Texas MutualSM workers’ compensation
specialist, asked Fortune on two occasions whether she was working. Fortune replied “no”
both times, and Bryson documented the conversation in her file.

Texas MutualSM investigator Michael Bradley said he was also suspicious of Fortune’s
claim, but he was unable to turn up enough evidence to prove fraud during his initial
investigation. Bradley “closed” the case, but left himself a note to reopen it in six
months.

That’s when Bradley discovered that Fortune had worked for two temporary services while
continuing to collect TIBs from Texas Mutual Insurance Company. After Bradley received
employment verifications from the two temporary services, he took the evidence to Donna
Crosby, the Travis County assistant district attorney who prosecuted the case.

Crosby had to prove that Fortune intentionally lied in order to receive TIBs. Although
Bradley’s tenacity was crucial in compiling enough evidence for Crosby to take the case
to court, he credits Bryson with providing the proof Crosby needed to win the case.

“Sharmane (Bryson) clearly documented that she asked Ms. Fortune about her employment
status twice,” said Bradley. “Sharmane’s files were crucial in proving that she (Fortune)
intentionally lied in order to continue to receive TIBs. We do this kind of detailed
documentation on all our claims, and we encourage our policyholders to do the same.”

JANUARY 28, 2002—Anything that could go wrong, did go wrong for Lubbock’s Kendal Murphy at the 147th
District Court. The court sentenced Murphy to seven months deferred adjudication for workers’
compensation insurance fraud-related charges. The court also ordered him to pay $7,209.24 in
restitution to Texas Mutual Insurance Company.

Donna Crosby, the Travis County assistant district attorney who prosecuted the case,
successfully proved that Murphy had lied to his employer, his doctor, the Texas Workers’
Compensation Commission (TWCC), and Texas Mutual Insurance Company about his company’s offer
of light-duty work. TWCC rules require an employer to make a “bona fide offer of
employment” to an injured worker when the employer accepts the doctor’s work restrictions.
After Murphy’s doctor released him to return to work, Murphy’s employer offered him a
light-duty assignment that met the doctor’s restrictions.

“Usually, employers send the offer by certified mail, but in this case, the employer
tried to hand the offer to Murphy in person,” said Tommy Jones, the Texas MutualSM
investigator who handled the case. “Before he made the offer, Murphy’s boss told us he
planned to record the conversation. Murphy refused to take the written offer, and his
employer got it all on tape.”

Under TWCC rules, when an injured worker declines a bona fide offer of employment,
the insurance company can stop paying temporary income benefits. When Texas Mutual
Insurance Company discontinued his income benefits, Murphy challenged the decision through
the TWCC dispute resolution process by claiming that his doctor never notified him of
his release to return to work. The doctor’s records clearly showed otherwise.

“When Murphy denied that his boss offered him light-duty work, all we had to do
was produce the recording for the hearing officer,” said Jones. The contested case
hearing ruled in favor of Texas Mutual Insurance Company, and an appeals panel upheld the
decision.